General Dynamics (GD) 8-K General Dynamics Third Quarter Revenues Increase 35 Percent

Exhibit 99.1

3190 Fairview Park Drive
Falls Church, VA 22042-4523
www.generaldynamics.com	News
	October l5, 2003
	Contact: Rob Doolittle
	Tel 703 876 3199
	Fax 703 876 3186
	rdoolitt@generaldynamics.com

General Dynamics Third Quarter
Revenues Increase 35 Percent

• Significant revenue growth

• Strong cash flow

• Increasing backlog

FALLS CHURCH, Va. –General Dynamics (NYSE: GD) today reported 2003 third quarter revenues of $4.4 billion, a 35 percent increase over 2002 third quarter revenues of $3.3 billion. Net earnings in the 2003 third quarter were $262 million, or $1.32 per share on a fully diluted basis, compared with 2002 third quarter net earnings of $268 million, or $1.32 per share fully diluted. The quarter ended September 28.

Sales for the first nine months of 2003 were $11.8 billion, compared with $9.9 billion for the first nine months of 2002, an increase of 19 percent. Net earnings for the first nine months of 2003 were $725 million, or $3.64 per share on a fully diluted basis. Net earnings in the same period for 2002 were $760 million, or $3.74 per share fully diluted.

Net cash provided by operating activities totaled $368 million in the quarter and $826 million year-to-date. Free cash flow, defined as net cash provided by operating activities less capital expenditures, was $320 million in the quarter and $711 million for the first nine months of 2003.

Funded backlog at the 2003 nine-month point is $24.3 billion, and total backlog is $38.7 billion, compared with $21.6 billion and $29.5 billion, respectively, at this point last year.

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“In the quarter, we experienced significant organic sales growth, respectable earnings performance, very strong cash generation and strong order intake resulting in a significant backlog increase,” said Nicholas D. Chabraja, General Dynamics chairman and CEO.

“Earnings were impacted negatively by a significant charge in our Marine Systems group for commercial shipbuilding at NASSCO that was essentially offset by a favorable tax event in the quarter,” said Chabraja.

“The Information Systems and Technology segment continues to perform well with good sales and earnings growth. As expected, the acquisition of Veridian Corporation was completed in the third quarter, and it is quickly being integrated,” said Chabraja. “Another important addition, Digital System Resources was also completed in this period, expanding our depth in support of intelligence customers.”

“Gulfstream’s operating earnings continued the sequential quarter-over-quarter improvement they have been generating through this year, overcoming continuing, albeit diminishing, charges on pre-owned aircraft sales and restructuring costs. Gulfstream continued to improve operations by taking cost out of the business, reducing its inventory of pre-owned aircraft available for sale, and experiencing price stabilization in both pre-owned and new aircraft sales activity,” Chabraja said.

“The Combat Systems group also experienced strong sales and earnings growth. The acquisition of Intercontinental Manufacturing (IMCO) closed in the quarter, broadening our participation in the production of aviation munitions. In addition to the positive effect of adding IMCO, the Combat Systems group benefited significantly from the continued integration of GM Defense, and from increased activity at Santa Barbara Sistemas related to the Leopard tank program,” said Chabraja.

“In addition, the Marine Systems group received the largest single order for submarines ever placed by the United States Navy, boosting its total backlog to $18.6 billion. This gives the group additional opportunities to enhance performance into the next decade,” he said.

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General Dynamics, headquartered in Falls Church, Virginia, employs approximately 66,900 people worldwide and anticipates 2003 revenues of approximately $15.5 billion. The company has leading market positions in mission-critical information systems and technologies, land and amphibious combat systems, shipbuilding and marine systems, and business aviation.

Any “Forward-Looking Statements” in this press release as to future results of operations and financial projections reflect the company’s views, but are necessarily subject to risks and uncertainties and no assurances can be given that such expressed or implied results will be achieved. A more complete expression of these risks and uncertainties is contained in the company’s filings with the Securities and Exchange Commission, and you are encouraged to review these filings, of which the form 10-K and forms 10-Q may be of particular interest.

WEBCAST INFORMATION:General Dynamics will webcast its third quarter security analyst conference call, scheduled for 11 a.m. Eastern Daylight Time on Wednesday, October 15, 2003. Those accessing the webcast will be able to listen to management’s discussion of the third quarter, as well as the question and answer session with security analysts.

The webcast will be a listen-only audio broadcast, available atwww.generaldynamics.com. A Real Audio player or Windows Media™ player is required to access the webcast; information about downloading those players is available on the company’s website. An on-demand replay of the webcast will be available beginning at 2 p.m. on October 15 and will continue for 12 months.

To hear a recording of the conference call by telephone, please call719 457-0820; passcode 196396. It will be available from 2 p.m. on October 15 until midnight on October 29, 2003.

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CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

		Third Quarter						Variance
		2003			2002			$			%
NET SALES		$	4,427		$	3,284		$	1,143			34.8	%
OPERATING COSTS AND EXPENSES			4,070			2,860			(1,210	)
OPERATING EARNINGS			357			424			(67	)		(15.8	)%
Interest, Net			(29	)		(11	)		(18	)
Other Income, Net			(3	)		8			(11	)
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			325			421			(96	)		(22.8	)%
Provision for Income Taxes			70			143			73
EARNINGS FROM CONTINUING OPERATIONS		$	255		$	278		$	(23	)		(8.3	)%
Discontinued Operations, Net of Tax			7			(10	)		17
NET EARNINGS		$	262		$	268		$	(6	)		(2.2	)%
EARNINGS PER SHARE — BASIC
	Continuing Operations	$	1.29		$	1.38		$	(0.09	)		(6.5	)%
	Discontinued Operations	$	0.04		$	(0.05	)	$	0.09
	Net Earnings	$	1.33		$	1.33		$	—			0.0	%
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)			197.3			201.6
EARNINGS PER SHARE — DILUTED
	Continuing Operations	$	1.28		$	1.37		$	(0.09	)		(6.6	)%
	Discontinued Operations	$	0.04		$	(0.05	)	$	0.09
	Net Earnings	$	1.32		$	1.32		$	—			0.0	%
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)			199.0			203.1

Exhibit A
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CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

		Nine Months						Variance
		2003			2002			$			%
NET SALES		$	11,783		$	9,892		$	1,891			19.1	%
OPERATING COSTS AND EXPENSES			10,730			8,676			(2,054	)
OPERATING EARNINGS			1,053			1,216			(163	)		(13.4	)%
Interest, Net			(59	)		(34	)		(25	)
Other Income, Net			3			8			(5	)
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			997			1,190			(193	)		(16.2	)%
Provision for Income Taxes			279			408			129
EARNINGS FROM CONTINUING OPERATIONS		$	718		$	782		$	(64	)		(8.2	)%
Discontinued Operations, Net of Tax			7			(22	)		29
NET EARNINGS		$	725		$	760		$	(35	)		(4.6	)%
EARNINGS PER SHARE — BASIC
	Continuing Operations	$	3.63		$	3.88		$	(0.25	)		(6.4	)%
	Discontinued Operations	$	0.04		$	(0.11	)	$	0.15
	Net Earnings	$	3.67		$	3.77		$	(0.10	)		(2.7	)%
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)			197.8			201.5
EARNINGS PER SHARE — DILUTED
	Continuing Operations	$	3.60		$	3.85		$	(0.25	)		(6.5	)%
	Discontinued Operations	$	0.04		$	(0.11	)	$	0.15
	Net Earnings	$	3.64		$	3.74		$	(0.10	)		(2.7	)%
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)			199.4			203.1

Exhibit B
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NET SALES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS

	Third Quarter							Variance
	2003					2002		$			%
NET SALES:
INFORMATION SYSTEMS AND TECHNOLOGY	$	1,303			$	890		$	413			46.4	%
COMBAT SYSTEMS		1,048				707			341			48.2	%
MARINE SYSTEMS		1,190				863			327			37.9	%
AEROSPACE		808				739			69			9.3	%
RESOURCES		78				85			(7	)		(8.2	)%
TOTAL	$	4,427			$	3,284		$	1,143			34.8	%
OPERATING EARNINGS:
INFORMATION SYSTEMS AND TECHNOLOGY	$	146			$	135		$	11			8.1	%
COMBAT SYSTEMS		117				80			37			46.3	%
MARINE SYSTEMS		36				78			(42	)		(53.8	)%
AEROSPACE		50				100			(50	)		(50.0	)%
RESOURCES		8				31			(23	)		(74.2	)%
TOTAL	$	357			$	424		$	(67	)		(15.8	)%
OPERATING MARGINS:
INFORMATION SYSTEMS AND TECHNOLOGY		11.2	%			15.2	%
COMBAT SYSTEMS		11.2	%			11.3	%
MARINE SYSTEMS		3.0	%			9.0	%
AEROSPACE		6.2	%	*		13.5	%
RESOURCES		10.3	%			36.5	%
TOTAL		8.1	%			12.9	%

* Aerospace margins were 9.1% in the third quarter of 2003 excluding pre-owned aircraft activity.

Exhibit C
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NET SALES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS

	Nine Months							Variance
	2003				2002			$			%
NET SALES:
INFORMATION SYSTEMS AND TECHNOLOGY	$	3,450			$	2,688		$	762			28.3	%
COMBAT SYSTEMS		2,879				1,967			912			46.4	%
MARINE SYSTEMS		3,149				2,643			506			19.1	%
AEROSPACE		2,117				2,382			(265	)		(11.1	)%
RESOURCES		188				212			(24	)		(11.3	)%
TOTAL	$	11,783			$	9,892		$	1,891			19.1	%
OPERATING EARNINGS:
INFORMATION SYSTEMS AND TECHNOLOGY	$	398			$	329		$	69			21.0	%
COMBAT SYSTEMS		328				216			112			51.9	%
MARINE SYSTEMS		165				215			(50	)		(23.3	)%
AEROSPACE		135				394			(259	)		(65.7	)%
RESOURCES		27				62			(35	)		(56.5	)%
TOTAL	$	1,053			$	1,216		$	(163	)		(13.4	)%
OPERATING MARGINS:
INFORMATION SYSTEMS AND TECHNOLOGY		11.5	%			12.2	%
COMBAT SYSTEMS		11.4	%			11.0	%
MARINE SYSTEMS		5.2	%			8.1	%
AEROSPACE		6.4	%	*		16.5	%
RESOURCES		14.4	%			29.2	%
TOTAL		8.9	%			12.3	%

* Aerospace margins were 10.8% in the first three quarters of 2003 excluding pre-owned aircraft activity.

Exhibit D
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PRELIMINARY FINANCIAL INFORMATION (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AND EMPLOYEE AMOUNTS

				Third Quarter						Third Quarter
				2003						2002
Cash				$	697					$	467
Short-term Debt				$	1,234					$	1,315
Long-term Debt					3,310						735
			Total Debt	$	4,544					$	2,050
Net Debt				$	3,847					$	1,583
Shareholders’ Equity				$	5,586					$	5,121
Debt-to-Equity					81.3	%					40.0	%
Debt-to-Capital					44.9	%					28.6	%
Book Value per Share				$	28.27					$	25.46
					Quarter		Year-to-date				Quarter		Year-to-date
Net Cash Provided by Operating
		Activities		$	368		$	826		$	254		$	594
Capital Expenditures					(48	)		(115	)		(46	)		(146	)
	Free Cash Flow (A)			$	320		$	711		$	208		$	448
Total Taxes Paid				$	47					$	85
Depreciation and Depletion				$	52					$	48
Other Intangible Assets Amortization					16						8
	Depreciation, Depletion and Amortization			$	68					$	56
Company Sponsored R&D (B)				$	74					$	63
Employment					66,900						53,400
Sales Per Employee				$	275,600					$	255,100
Shares Outstanding					197,561,240						201,171,150
Weighted Average Shares Outstanding -
			Basic		197,310,727						201,627,445
			Diluted		199,022,170						203,121,446

(A) The company’s management believes free cash flow from operations is a measurement that is useful to investors, because it portrays the company’s ability to generate cash from its core businesses. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. The most directly comparable GAAP measure to free cash flow is net cash provided by operating activities.

(B) Includes IR&D and B&P costs and Gulfstream product development costs.

Exhibit E
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BACKLOG (UNAUDITED)
DOLLARS IN MILLIONS

	Third Quarter 2003
					Total		IDIQ		Total Estimated
	Funded		Unfunded		Backlog		Contract Value (A)		Contract Value
INFORMATION SYSTEMS AND TECHNOLOGY	$	5,931	$	1,409	$	7,340	$	6,506	$	13,846
COMBAT SYSTEMS		5,569		699		6,268		160		6,428
MARINE SYSTEMS		8,810		9,774		18,584		—		18,584
AEROSPACE		3,831		2,431		6,262		—		6,262
RESOURCES		180		64		244		—		244
TOTAL	$	24,321	$	14,377	$	38,698	$	6,666	$	45,364

	Second Quarter 2003
					Total		IDIQ		Total Estimated
	Funded		Unfunded		Backlog		Contract Value (A)		Contract Value
INFORMATION SYSTEMS AND TECHNOLOGY	$	5,519	$	260	$	5,779	$	5,648	$	11,427
COMBAT SYSTEMS		5,889		728		6,617		98		6,715
MARINE SYSTEMS		7,761		3,158		10,919		10		10,929
AEROSPACE		4,128		2,415		6,543		—		6,543
RESOURCES		199		64		263		—		263
TOTAL	$	23,496	$	6,625	$	30,121	$	5,756	$	35,877

(A) IDIQ contract value represents management’s estimate of the future contract value under existing indefinite delivery, indefinite quantity contracts. Because the value in these arrangements is subject to the customer’s future exercise of an indeterminate quantity of delivery orders, these contracts are recognized in backlog when funded.

AEROSPACE UNIT DELIVERIES (UNAUDITED)

	Third Quarter				Nine Months
	2003		2002		2003		2002
GREEN:
LARGE AIRCRAFT		14		14		37		47
MID-SIZE AIRCRAFT		5		3		16		21
TOTAL		19		17		53		68
COMPLETIONS:
LARGE AIRCRAFT		12		17		37		53
MID-SIZE AIRCRAFT		8		2		13		20
TOTAL		20		19		50		73
PRE-OWNED:		9		9		24		15

Exhibit F
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